A quick reminder of how surprising this all is. The economy has shrunk by 6% since the recession began - one of the sharpest recessions since the 1930s. On past experience, you would expect employment to have fallen rather more than output - in the 1990s, for example, the economy shrank by 2.5%, but employment fell by 3.4%.

But this time, employment has not even fallen as much as in the 1990s. Overall, employment has fallen by around 2% - a fraction of the fall in output.

On the broader measure, unemployment in the three months to November stood at 2.46m, the first quarterly fall in 18 months, and 450,000 less than the government and others predicted a year ago.

Labour says the difference this time is down to government policies - policies which, as it happens, the Conservatives opposed. As ever, the facts are not so clear-cut. But it's such an important question for the campaign I thought it worth having a long hard look. You'll see the results on the main UK news bulletins tonight.

As I discussed last month, employer behaviour is a big piece of the explanation. Companies are hoarding labour in this downturn - rather more than in the past. This is not all down to the government - far from it.

In fact, the biggest factor was that companies came into this recession with higher levels of profitability than in the past. There were fewer companies who had to rush into massive job cuts - simply to keep their heads above water.

The sheer level of government stimulus has played a part in keeping profitability up through 2009 - another stark contrast with the early 90s and early 80s. But I'm not talking here about the very modest stimulus package introduced in November 2008. I'm talking about the massive and very rapid cut in interest rates - not possible in past recessions due to the ERM, and the need to bring down inflation.

There's also the fact that the government went into this recession with real spending - and borrowing - much higher as a share of the economy than anyone had really intended. This inadvertent stimulus - driven by an optimistic view of the long-term sustainable growth of the economy - meant that there was more of a cushion for overall demand than there would have been under more "prudent" policies. That's what I mean when I talk about accident rather than design.

However, both the VAT cut and the "Time to Pay" initiative have shifted more of the cost of the recession onto government revenues - rather than company profit.

It's hard to get solid figures here, but the Treasury claims that this initiative has let more than 150,000 companies spread tax payments worth more than £3bn.

Anecdotally, I do hear of a lot of small businesses for whom this has made all the difference - though, of course, it doesn't change the long-term bottom line.

There are specific regulatory changes that also seem to have played a role. For example there's now no balance sheet advantage now to kicking workers into early retirement, because the cost-shifting now has to be clearly noted on the bottom line. (Also company pension funds don't have nice fat surpluses any more to make the shift worth doing.)

More generally, regulations now make it much more onerous for employers to lay off staff. That's hardly the mark of a "flexible" labour market - and it's not being trumpeted by the government today - but I'm sure it has played a role.

Taken together, these regulatory differences have helped transform the experience of this recession for older workers. Last time around, they took the brunt of the adjustment - now it's the young who are getting it in the neck.

However, employer hoarding isn't the whole story. Arguably, workers themselves have made the greatest contribution - by accepting a tight squeeze in pay. As I discussed when the December figures came out, real earnings have taken the brunt of this recession.

Those in work have been accepting little or no pay growth - and those out of work have been taking new jobs which pay less.

As hundreds of thousands of people will testify, companies have laid off workers on a grand scale in the past year - far more than you might guess from the headline change in unemployment.

The difference is explained by a dramatic rise in part-time working - either female partners are going back into the workforce to make up for the lost pay packet, or those full-time workers have taken part-time work instead of staying on the unemployment rolls.

Today's figures show another fall in the number working full-time - it went down by 113,000 over the three months to November, whereas part-time work went up by 99,000 - to a record high of 7.7 million. Of those, over a million were working part-time because they couldn't find a full-time alternative.

That big rise in part-time work explains why hours have fallen more sharply in this recession than in the last. Full-timers are working shorter hours too, but, interestingly, according to Professor Paul Gregg at the University of Bristol, no more than in the past.

But here's the big thing: people are exiting unemployment faster than in past recessions. We have seen a smaller rise in inactivity and long term unemployment than everyone - including the government - expected.

I think there are many reasons for this - including the fact that people were gloomier going into this downturn, and perhaps more willing to take lower paid work than in the past. But the tax and benefit system does appear to have helped.

In relative terms, unemployment benefits - especially for families without kids - are lower than they were in past recessions, and it is harder to qualify for incapacity benefit. Whereas - whatever you think about the bureaucratic downsides of tax credits, in a recession they do make it more attractive for people to take lower paid work. According to the Treasury, in 2008/9, 355,000 families whose income had fallen received on average an extra £35 per week in tax credits.

Job centres have changed, too, though this contribution is harder to gauge. From my own visit to a job centre in Hertford this week I can certainly attest that they are more "user-friendly" than their 1980s predecessors, where the chairs were chained to the floor and 4-inch screens separated the claimants from the benefit officers. Everyone's a "customer" now, and the system does seem better geared to getting people back into work - even if it's only a short-term job.

Once again - I think the macro aspect is the key here. One of the reasons those job centres have jobs to give is the public sector's kept hiring - the number of jobs in the public sector rose by more than 90,000 between the third quarter of 2008 and the third quarter of 2009.

It's hard to get comparable figures, but in an equivalent period during 1991-92, public sector employment rose by just 6,000. At Hertford, employment in job centres across the district had risen by 60% since the recession began.

Of course, this cannot last. We know that both the spending and the public sector jobs are going to be squeezed in the next few years. In fact, most of the new people working at job centres and the like are on fixed contracts which run out in April of 2011.

There's the rub. The government may be able to claim some credit for the curious behaviour of the labour market in this recession. But - to coin a phrase - we can't go on like this. All of this only adds up if the economy comes back strongly in the next year or two - so that employers can hold on to the workers they've fought to retain, and public borrowing can stop taking so much of the strain.

And, in the meantime, you have younger people taking far more than their fair share of the rise in unemployment that has occurred.

It's true that there are full-time students included in the headline figures for youth unemployment. But many others - drifting between inactivity, casual work, and intermittent school, aren't being counted at all.

Professor Gregg thinks the decline in employment among 16-17-year-olds and 16-24-year-olds is storing up huge problems for the future.

So yes, it's good news for all of us - not just the government - that unemployment is flattening out. But we're not out of the woods yet.

Comment number 2.

Two pieces of data from today's release that support your contention this improvement isn't sustainable:1. Average weekly earnings are now higher in the public sector than the private sector (even if you exclude financial services).2. While unit wage costs are falling in manufacturing, they are still rising across the economy as a whole.As the economy recovers, I would expect the labour market to remain stagnant for some considerable time as firms work existing workers harder and the public sector downsizes.

Comment number 3.

At last a blog that proves that the fabled BBC impartiality is alive and kicking - you will probably get roundly criticised by both the left and right wingers posting here.

One of the big reasons at least in service sector for high employment being maintained is the willingness of employees to accept pay cuts of 10%+. As we come out of recession one of the big issues is how quickly employees get the pay cut returned to them.

Despite being a Tory, I do have to give the govt credit for the time to pay policy on tax - it is has made a big difference in the SME sector although I am worried about the number of people who have abused it.

But for me the frightening stat was that public sector employment has increased by 90,000 - so much for "efficiency savings" The public sector is living in fantasy land. Whoever wins the next election will need to cut public spending over the next parliament by some 10-15% which is going to means several 100,000 public sector redundancies.

In the public sector employment has gone up but productivity down under Labour. So we have more people doing less work in public sector than ever before

Comment number 5.

Stephanie, please, please, please, can you and others make the most basic point possible, and which seems to escape all in the media. Any fool can keep a household or country going and looking good by max-ing out the credit card. Why are you giving a government credit for bankrupting the country in order to keep the largest public sector overhead we've ever had (war excepted) in place? This is not real productivity, it's a con, and with no comment from folks like yourself, the government may manage to keep the lid on unemployment figures until after it's conned everyone at another election. It's value for money that's important i.e. how many necessary and long-term beneficial jobs retained per £bn of borrowing. Any fool can spend money to make life pleasant for everyone in the short-term. 2.5m unemployed without any public sector losses is absolutely abysmal, and a more important difference from past recessions than any you've listed in your blog. It's short-term fiddling and conning, which younger people will have to pay for in decades to come

Comment number 7.

"At Hertford, employment in job centres across the district had risen by 60% since the recession began."

Stephanie, I think you should get out a bit more. Go to the north, far west, deepest East Anglia or anywhere else a long way from your usual haunts and spend a week or two looking around. Leave your blackberry in London and cut yourself off from political spin.When you get back post an article based on your own observations. Good luck.

Comment number 8.

3. At 12:59pm on 20 Jan 2010, Justin150 wrote:I do have to give the govt credit for the time to pay policy on tax - it is has made a big difference in the SME sector although I am worried about the number of people who have abused it.------------------------------------------I am certain that this will lead to a spike of insolvencies as catch-up bites. There will have been a load of abuse but at least it was another way of keeping the unemployment figures lower than otherwise.

Comment number 9.

just because they are not claiming benefit doesn't mean they are not unemployed and looking for work....if you have been prudent and made some savings instead of buying those huge lcd televisions that MP's can not live without, you are not entitled to jsa or benefits...jsa is not paid to self employed who have no job...jsa is only paid for 182 days, if you are over 60 jobcentres put you on pension credit so you are not in the unemployed figures...Long-term unemployment - those out of work for more than a year - increased by 29,000 to 631,000, the highest figure since 1997.

Comment number 10.

I am a firm believer "Employer behaviour is a big piece of the explanation" for this surprising drop in the unemployment figures.

From my position as a recruitment consultant, we have seen compnies who have struggled to keep their heads above the water and who shedded staff through the last 18 months, noting an uptake in demands for their good/services are now speedly replacing their old team members - but offering lower salaries for the same role.

Roles that were once paying between £40-£45k are now looking to offer between £35-£40k. Companies are also being much more cautious with their bonus and benefit schemes.

We saw the contract employment market contract dramatically over the last 18 months, and have seen from December onwards an uptake in the number of opportunities for contractors, as well as a steep increase in the number of permanent opportunities.

Comment number 11.

One point only birefly touched on is the size and wastefulness of the public sector under Brown's Chancellorship and Premiership. His massively bureaucratic HMRC creation being the exemplar. Thus production falling by more than employment is hardly surprising since the public sector has been little touched by employment cuts, while adding much less proportionally to 'production' in the economy. (How is the administartion of the ridiculous Family Tax Credit system 'productive'?)In other words, the productive sector is subsidising the unproductive sector. Clearly this can't last...watch this space, whoever wins the election

Comment number 13.

The important bit comes towards the end of the article: "we can't go on like this". Indeed we can't. The public sector is running with such a huge deficit that whoever wins the election is going to have to make massive cuts in the public sector if they are going to have any chance at all of balancing the books.

And guess what that will mean? Massive job cuts in the public sector. Gordon Brown has so far put this off because he knows what it would do to his electoral chances if he does it before the election, but it's going to have to happen pretty soon after the election. And then just watch what the unemployment figures do.

BTW, are there any reliable figures for how much the headline figures have been affected by people taking part-time jobs? It would be nice to see some reliable statistics measured in FTEs rather than just categorising people as "in work" or "out of work".

Comment number 14.

I am afraid that although unemployment has nominally stoppoed increasing, it will be wise to hold judgement on the sustainability of any recovery until:-Interest rates start going up to sensible levelsPublic Sector Structural Defecit is tackled.

I suspect this is merely a phase of flattening out or mild improvement until after the election when the proverbial will hit the fan.

Comment number 17.

I'm finding it hard to correlate an increase in public sector employment and self congratulation for bringing unemployment down. It clearly shows that we have a long way to go in getting the UK back on the right track.

How many more people are now employed in the public sector since 1997?

Comment number 18.

After the election I fear unemployment will climb steeply.At that point firms will have a better idea of the economic landscape for the next 10 years plus. Once the election is through we will see:1) Government employees laid off in droves and quickly too (even Darling wants to cut the deficit in half over a relatively short timespan);2) Private sector employers finally biting the bullet especially those with government/PFI contracts.3) Draconian changes to salary/retirement/pension benefits for state employees.Expect the cuts to be widespread to share the load (except for the noted exceptions of Health DFID police etc).My worry is that these changes will not tackle those public employees entrenched in their dependency culture. Government managers need to root out the government employees who fail to turn up for work/meetings etc. and generally play the system. I'm sure there are government employees who work hard and are experts in their field - it would be a shame to lose these at the expense of teh deadlegs. Let's not forget the change to pension regs coming in soon, the financing of which may force cuts to be even deeper. Finally, we should not underestimate the impact of government activity just not being done any more. The cuts in government spend and activity will not result in private sector taking up the slack. In the past, government activity taken out of the state sector and privatised was still paid for by government. It is likley that in such cases we will see cash from Government dry up, contracts ripped up and private sector employers being forced to shed staff. Unsurprisingly, I hear no one with the honourable exception of Frank Field telling it like it is.

Comment number 19.

Whilst it is tempting to reflect upon the lessons of the 1930s as that was the last true depression there are many dangers in doing so. The structure of the economy today is very different to that of the 1930s. Social provision today is also very different. The same holds true for the 70s, 80s and 90s recessions.

Stephanie, you suggest that comapnies entered this depression with higher levels of profitability. It can also be argued that they entered with lower levels of payroll costs and therefore did not need to rush to mass redundancies - we will have to see if that can be sustained if inflation takes off and stays at say 6% or over for any sustained period.

The unemployment figures become very cloudy due to the higher levels of self-employment, part-time working, and contract labour. This is further exacerbated by systems used to compile the returns on the level of unemployment.

As this depression progresses I believe that we will ulimately see higher and higher levels of unemployment in all sectors. Not until we take some protective measures to ensure long term job creation will we find any sustained upturn.

Comment number 21.

The reason why unemployment has not risen as much as expected is nothing to do with the Govt.

What makes this recession different is that those in work in the private sector have either "voluteered" to take a pay cut to keep their jobs or they have had their hours cut. My nephew is a surveyor and he has seen his wages fall sharply. My stepson has also seen his earnings fall because of loss of overtime. There are millions like them.

There are huge numbers of workers on flexible contracts which allow their employers to vary the hours they work. This very large group has also seen their earnings fall.

We can see the effect of falling earnings on output and employment. Output is down 6% and unemployment up by 2%, and the difference is largely due to falling earnings in the private sector.

It is for these reasons that public sector average earnings have moved ahead of private sector earnings as nearly all public sector workers work standard hours for a fixed wage.

It is a good thing that unemployment has not risen as much as expected but this is not a reason for huge joy because the purchasing power of large numbers in work has fallen, and this in turn depresses demand and confidence.

The other factor decreasing unemployment is that larger numbers of young people have chosen to defer entering the job market at this time by continuing with education or training. It can be no coincidence that the fall in unemployment in the last quarter coincides with the start of the academic year.

Comment number 22.

In my immediate circle almost every one I know has had lengthy periods out of work over the last year (some are still without work). However as all had 15 - 20 years working behind them in relatively prosperous times, all had savings which mean they don't qualify for income-based JSA, just contribution based. So after 6 months they dissapear from the statistics.

Is this a contributor to the lack of long term unemployed? The fact that the axe this time has fallen pretty evenly and has hence hit a lot of realitively well off people?

No idea, of course. But when you add it to the (already highly complex) possible reasons outlined in the blog it just shows how the effects of policies are not only impossible to predict, but even impossible to assess after the fact...

Comment number 23.

A so called drop of 7,000!!!!!!!!!!! in 2.6 million -WHAT percentage is that???? and some deluded people think this will persuade us to vote for the VERY shower who brought us to 2.6 million??? - I DESPAIR of so called sensible people being so easily duped - I include ALL BBC staff in that.

Comment number 25.

Please bear in mind that all this government intervention has had only one purpose: A political dividend to be cashed in come May 2010. Whether it will yield quite the returns they are hoping for is another matter, but don't let anyone be under any illusions as to the cost of this "success". A current budget deficit of almost GBP200bn for the year to April 2010 and at least the same again next year if they get the chance.

The private sector simply could not sustain itself under these conditions and since the public sector relies on the private sector to pay the bills, how can this possibly go on?

If public borrowing is deferred taxation, then all we have is deferred unemployment, and when it happens, regardless of who is in government, we'll know where the blame lies.

Comment number 26.

Good news and analysis. Maybe its not all about government employment, as you say. Maybe private business and workers are more productive and efficient than in the 90s. But, the number of inactive people of working age has reached a record high of 8.05 million, boosted by 2.24 million students ( funded by government and debt) not in the labour market.What would be the position if these students had signed on the JSA. I wonder how many students in full time education there were during the last recession in comparison that otherwise would be on the dole?

Comment number 27.

The underlying unemployment conditions in the 16 - 25 age group is a significant cause for concern. I don't think that we should attach too much joy to today's figures. Higher taxes and cuts in public expenditure - which are coming along fast -are bound to have an adverse effect on future employment.

Comment number 28.

I would agree totally with prof john locke,work hard save some money and the 1st time in your life you are made redundant,get £60;50p for 182 days then nothing you are not even a statistic[until your money runs out ,sell your house you paid for spend that then go cap in hand.gordon brown eat your heart out.

Point 3) is now a serious factor for many organisations & unless it can be improved the UK faces growing uncompetitiveness with consequent job and other economic losses. The UK work force - for example - is not a patch on the German in terms of education, training, knowledge & expertise.

Comment number 31.

As a business woman benefiting from Time to Pay I can confirm that it has proved an excellent way of improving cash flow in the business. No it doesnt change profitability, but for most businesses, cash in king.

Our bank manager has privately admitted that banks are only going to offer lending to businesses that dont need need it - no wonder they claim that many businesses have not used up their credit lines!

Comment number 32.

Yes, if by credit you mean the level of the figures published today, but the true cost of this 'success' must be as the result of the economic destruction to come!

Getting people off of the dole by making finance free can only be of a very short term value. It looks good to print money in the short term - just as we had full employment during the war - the economic cost was of course the wholesale destruction of the British economy for well over two decades.

If we had had realistic costs for money then a reduction in unemployment would be a true success as it is, although very pleasant for those who would have been unemployed, the destruction to come must worry everyone!

Comment number 33.

I really do wish the BBC would stop acting as chief propogandist for the Labour government and start doing its job of using journalists to investigate the news and print it.The news is that the % of those employed has once again FALLEN, this means the % who are unemployed (the opposite to employed) has RISEN. This is in line with expectations. The 'headline' figure is fudged, has been since Thatcher, to allow the government of the day to claim just about anything despite reality.The reasons that employment - the number with jobs - keeps falling in the UK are totally consistent with expectable outcomes of government policy....All government spending bodies continue to buy foreign at every opportunity - from BMW's for cabinet ministers, to Mercedes vans for council workers, Indian software engineers for every software project, Chinese uniforms for our army to wear and Belgium guns for them to fire. All of this expenditure has some serious effects:a) It profits the foreign companies involved, offering them the opportunity to invest more money in improving products and long term competativeness.b) It increases employment in foreign countries allowing them to maintain a lower taxation rate making them more competative (both company and individually - if I pay 40% tax and someone in China 20% I obviously need to earn more to buy a bag of potatoes).c) It takes money from the UK economy, meaning that companies here - from shops and pubs to manufacturers - have less money circulating - leading to less orders and less employment.d) It lowers employment and competativeness for ALL UK companiese) It provides free advertising for foreign companies - after all if the MET believe that a BMW X5 at 50% more than a Range Rover is better then why shouldn't Joe Public?

What the BBC needs to be doing is looking beyond government propoganda and bull and digging into the real stories.

After all, I can prove that a £45,000 Jaguar represents a CHEAPER buy for the UK tax payer than a £30,000 BMW - its not actually that difficult. And its the reasoning that is used every where else in the world to justify their government spending - in over a year in Germany there is not a SINGLE foreign vehicle paid for by the German government - and no, its not because they are the best - in France all government vehicles are French, in Italy they are all Italian, in Sweden they are Swedish, in the USA they are American..... Its only here in the UK that we would prefer to close our factories and pay the people to sit at home than to buy locally and keep them working.

Comment number 34.

It is nothing more than Creative Accounting! When D.Cameron gets in, his first job will be to tell us all the truth about our indebtedness, excesses let alone actual unemployment figures. It may affect our AAA rating but honesty may come back into politics. Or, I'm kidding myself?

Comment number 37.

What Gordie fails to tell us is how many of these unemployed are no longer classed as unemployed but as inactive ? No figures issued by this government can be believed. Until the spending on the public sector, (all of it) is reduced considerably, there will be no way out of the massive debt Brown's incompetence prior to the recession has created. Whoever wins the election, must make cuts to all of the public services, and make compulsory and real efficiency savings. This will of course produce a true figure for unemployment , not a figure hidden by thousands of jobs in the public sector that have nothing to do with providing essential services to the public and more to do with empire building and hiding the depth of the recession.

Comment number 38.

Today we hear that the Offical count in UK Unemployment figures for the the last Quarter has shown a decrease in the total level of those claiming Benefits, or put another way, - Today we have seen a rise of 9,000 claiming State Unemployment Benefit in Scotland for the same UK Quarter Period.

Of course, we can ALL use these same figures to add-up to many certain ways in thinking from:[1]. There is now today more Part-Time working in the overall UK Work-Based employment System than ever.[2]. Over-loading in the amounts of LAST TERM School leavers staying on for yet another Year, if only to be disapointed yet again next Spring, while also many more of the Unemployed have also jumped onto this same Turn-Style bandwagon to return to further Training just to keep them both off of the street, and off of the Offical Unemployment count.

Therefore, as we now approach a General Election it will be very hard for either Labour or Conservatives to take any comfort from todays figures, for they ALL know full well that after the next General Election that Unemployment WILL again RISE further and quicker once they have reduced the level of Public Expenditure that will effect both the Public and Private sectors of everyday Industry, leading to a much reduced level in spending on our everyday GDP's.

Comment number 39.

Good article. Sadly the Man from Kirkaldy's hubris knows no bounds. Having justified every reverse over the past 18 months to global events beyond the government's control, he has pounced upon this glimmer of good news as being a direct result of the wise policies of the government and he...the Great Helmsman himself. He must think that we don't notice!

Two deductions can be made from todays good news. The first one you articulate well in that well managed companies are not so quick to shed good staff these days...they're too valuable and those unlucky enough to lose their jobs have been quicker to get back into work via part-time working.

The other point is that perhaps after all the huffing and puffing, all those nights of news broadcasts and acres of webspace dedicated to Recession Tracking, Bankrupt Britain etc that it well...wasn't quite as bad as it was cracked up to be. Certainly, central banks and companies are a bit more savvy these days when it comes to protecting the financial system which may have muted the worst effects, but this certainly not the Great Depression II.

Perhaps amongst the lessons that we can learn from this episode and reflect upon in the decades to come is that a) bottomless fiscal stimulus may help, provided you don't care about the financial prospects of your grandchildren and b) and little media sobriety could go a long way to help keep heads a little cooler!

Comment number 40.

No the Government cannot fairly say unemployment has gone down. More young people are remaining in higher education, there is more part time work and many top paid earners cannot get unemployment benefits, so do not show up on the figures. The UK is coming up to a General Election (May 6) and Labour looks like being defeated, this is the political PR machine trying to say its all OK. Lets ask critical questions.

Comment number 41.

It seems fashionable to be critical of the government.They can only lay the foundations for recovery ,it is up to commerce to build on it.It seems that business is more concerned about profit than employment.I can only shudder at what the country would be like if the government had not bailed out the greedy bankers.

Comment number 42.

Ask your Local Authority about the Future Jobs Fund from DWP and how although the programme is set to run until March 2011 the first round of funding to create jobs (in my area entirely public sector ones) finishes on the 31 May this year.

Lots of non jobs, advertised exclusively through the Job Centre, created for young people just long enough to get them off the unemployment figures until after the electionHmmmm.

Comment number 43.

If this makes it on the tv news I will be disgusted. The plain fact is that companies are being forced to keep people on the books as it is more costly than ever before to make people redundant or offer early retirement.

Yet more inefficiency and costs are being loaded onto companies to the point where we might as well sell what’s left of this country to the Chinese.

This is not news. This is the BBC’s opinion – and a very flawed and partial opinion too.

Comment number 44.

I agree that these unemployment numbers are a slight surprise and look forward to your further explanation of the facts behind them on the news broadcasts later. Halting any rise around the 2.6m mark would be some considerable achievement, if it transpires over the next 18 months, or so.

I also agree that the government could be hoist by its own petard next month or the one after, if there is a further retrenchment in the unemployment numbers. Claiming credit early for fixing unemployment could be foolhardy.

Like the earlier contributor, I would be interested to see if the 6 months rule about JSA contributions based claims is correct. Do these claimants drop out of the numbers either by not registering any further at the Job Centre? The figures for the long-term unemployed, knocking 2/3 million do not look very good at all and have gone up. This is more challenging than the youth unemployment.

Those people that still have jobs, but have had to take pay cuts of 10-12% are very lucky indeed and should consider themselves, so.

The CIPD had some pretty interesting remarks about the likely course of unemployment figures, if there is a change to a Conservative government in late spring/early summer.

We are certainly not out of the woods yet, by any means, as the redundancy announcements in the last week from Bosch, Cadbury and Eon all indicate.

Comment number 48.

Yes, funny how they are quick to take credit for the fall in unemployment but of course it was everybody else's fault when it was rising especially as Brown said, The American's and their faltering economy. I saw Y Cooper-Balls smirking on TV earlier droning on about what they had done to achieve this wonderful statistic, but we still have 2.5 million people registered unemployed and then there's the other 1.5 million who don't get counted. With Brown so desperate for any good news it is no surprise that they have been quick to jump on these figures and claim the credit but the British people are not that stupid. Like you say Stephanie, the Labour junta has got lucky with these given their cluelessness in dealing with it. As for the public services, they are in for a hammering no matter who wins the election. Their pay and pensions are now adding to the massive debts this country has and we can no longer afford it.

Comment number 52.

Also do not forget that with our large migrant workforce here, hundreds of thousands of these people have now returned home and are not adding to the unemployment figures, or costing the country in unemployment benefits.

Comment number 53.

Well all we can hope is that the Tories don't get in. Unemployment will be out of control if they do. As we know they all think that 'unemployment is a price worth paying'. We also know that leopards don't change their spots.

Comment number 55.

The post-election scenario will be so different. Massive cuts in public spending and big tax rises will cause deflation and and a major increase in unemployment, primarily from the currently bloated public sector. Mervyn King is right - it's high time Fiscal and Monetary policy were co-ordinated, because the longer they're not due to Gordon Brown insulting our intelligence with electoral considerations, the worse it will be. Caledonian Comment

Comment number 56.

Among all the valid comments about the apparent reduction in "recorded" unemployed figures, a missing factor is the "New Deal" con. After a period of signing-on, jobseekers are compulsorily "warehoused" on the scheme for 2 weeks and then 13 weeks. During which time they are still unemployed and receive benefits, but are removed from the official statistics.

Comment number 57.

55. At 3:43pm on 20 Jan 2010, Caledonian Comment wrote:'The post-election scenario will be so different. Massive cuts in public spending and big tax rises will cause deflation and and a major increase in unemployment, primarily from the currently bloated public sector'

From my basic research I note the following:

In 2009 the only large net buyer of UK fixed interest gilts was the Bank of England. The Maastricht Treaty Article 104(1) forbids Governments borrowing directly from central banks. The Bank of England has so far spent 99% on gilts and only 1% commercial debt. Quantitative Easing is a method funding Government without officially breaking the rules.

Robert Stheeman (The CEO of the Debt Management Office) told the Treasury Select Committee in November 2009 that they were cooperating with the Bank of England in the gilt market, but that when Q.E. stops, there could be a problem selling gilts. Pimco, the world’s biggest bond house says that it will be a net seller of UK gilts in 2010.

The projected deficit between tax receipts and Government spending is £200 billion.

Comment number 58.

Congratulations on a thorough insight into the present state of unemployment. You have covered just about all aspects of what appears to be going on.

You are right that the tax credit system has enabled many low earners to take lesser paid or part-time jobs without too much pain but the cost to the country rather than the employer is unsustainable in the longer term.

Although incapacity benefit is more difficult to qualify for sickness benefit is not and no one has yet come up with any figures of those signing on sick rather than as unemployed. Unemployment can cause many illnesses particularly anxiety and depression.

Again there sre those pretty useless training programmes which the unemployed are actively encouraged to take up as this takes them off the unemployment atatistics.

I'm pleased that unlike so many others who seem to take statistics as fact you have been prepared to look under the stone so to speak.

Comment number 60.

I agree that the public sector has increased and productivity may well have decreased, but certainly not in the area of work I deal with. Nevertheless the Government has charged us with doing more with less and is making drastic cuts in costs, like expecting us to do the same work without an office. No money has been promised to help with heating costs or extra insurance, to say nothing of equipment like phones, printers etc. So the productivity will decrease until I can get myself away from my PC at home to go and buy an ink cartridge from Staples at my own expense.This is already happening and we haven't started the massive cuts yet. The Government may take some credit for delaying huge rises in unemployment, interestingly with and election looming, but just watch the numbers rise from May onwards, whoever gets in.

Comment number 62.

One factor that you didn't (unless I missed it) mention, but have in the past, is the influence of migrant labour moving back home. The figures on my reading do seem to suggest that there has been a bigger proportionate loss of non-UK residents within the workforce than UK residents.Can the Government claim credit for being as accepting as it was of migrant labour, which is now cushioning the blow of unemployment? Probably comes into your "more by accident than design" category.

Comment number 64.

#56 Whilst on the subject of the "New Deal" con, were you also aware that for every individual found a job, the direct cost through civil services wages, beaurocracy etc is in the order £25k per placing.

Comment number 66.

Take it easy on the positive thinking front. It is not all your fault if it goes wrong.

Yes, there is suffering in the world, and there is no reason for a lot of it ...... no-one should be made to feel guilty for not being happy about something that is not their fault, in fact even if it is their own fault........nobody would say to a smoker dying of lung cancer it was their own fault.And a lot of positive thinking is nauseating, but on the other hand someone like Byron Katie has been inspirational to thousands of people..... 'Suppose you could find a simple way to embrace your life with joy, stop arguing with reality, and achieve serenity in the midst of chaos? That is what "Loving What Is" (by Byron Katie ) offers. It is no less than a revolutionary way to live your life. The question is: are we brave enough to accept it?' -- Erica Jong, author of Fear of Flying.

Comment number 67.

With all the technology and data collection and the disappreaance of any real privacy about almost anything in your life, it is interesting that government figures remain "unsure." I would assume that if the data is unclear one can say what it means dependent on your view of the world. I think they can tell you how many people voted for what party,and where and when as that is important to them, yet unemployment remains in the foggy gray area of information and when released always with the provision that one not add any meaning to the numbers. The government was able to save a lot of banking jobs and the banking bonuses must be helping out in the high-end auto and boating businesses. Most government information is now designed to misinform.

Comment number 68.

Hi Stephanie, I believe "Fall in Unemployment" means a reduction in the number of people claiming a Job related benefit; Not an increase in the number of people working. How many people have retired this month and begun to draw a company/state pension ? Those asked to take voluntary Redundancy may be 55+ and receive half pension until 60/65 and will not return to payed employment but "keep busy" in many constructive/beneficial yet unrecorded ways.

Comment number 69.

On 5 Jan, many colleagues "retired" early from our the US multinational company - to avoid savage cuts in final salary pension. On 5 February, many more follow them. I leave with dozens more on 5 March. There will be hundreds of us out of work, but we will not necessarily register, as we are being driven to draw pension immediately (or lost a huge amount).

Comment number 72.

Stephanie, I would be interested in your assessment of the impact that migrant labour has had on these figures. To what extent have eastern europeans been laid-off and/or returned home during this recession? Has this been a factor behind the lower-than-expected unemployment figures?

Comment number 74.

I'm not getting this "fall in unemployment" thing at all. My clients, 130 private sector companies in a wide variety of industrial sectors, most of whom you would have heard of, have on the whole charted a reasonably successful path through the crisis. At the first sign of a downturn labour was shed and this is ongoing. Interestingly even the least or not at all affected showed staff the door. This created physical space that is from my observations still there or has been disposed of. It created more work for the remainder of staff which is still ongoing. As a single observer I'm not seeing job creation at first hand not in leisure, property, utilities, motor sales & servicing or in technology.

I'm assuming this is a smoke and mirrors exercise with training and work experience schemes together with a bit of part-time/ job sharing taking up the slack.

Comment number 75.

Absolutely unbelievable that public sector employment has increased by 90,000 since the recession began.

Everyone on here who says the numbers are fudged is right imo.. Maybe the job centres have targets? We all know how those distort things. Also it was Xmas last month, plenty of temporary part time postman and shop assistant jobs. Just because you get a few weeks work you are not suddenly unemployed.

We need the figure for the 'economically inactive', about 8 million I believe.

Watching Mr Brown preening himself because of this great news on PMs questions this morning was sickening.

Comment number 77.

Stephanie - Excellent blog today, you have triggerred some interesting comments. My last penny's worth is: Have you ever visited JobCentre Plus and signed on. It's not for the faint-hearted. I am enlightened from some of the above comments and think your take and presentation, on unemployment figures is very good. No solutions to some of the questions asked but boy-oh-boy are we heading for some seriously bad unemployment numbers. As New Labour said, "It can only get better"!!!

Comment number 79.

....what a croc! GB managed to keep unemployment limited to 2.5 million and all it cost was zero interest rates, record borrowing and 200 billion of newly printed money.So there you have it, a decimated private sector, a maxed out national credit card and an economy entirely dependent on government spending. Do people really believe that after the election, GB can continue to support his 'client state'? Clearly turkeys are never going to vote for xmas, at least Mr Brown hopes so. Cynacism that it quite beyond belief, all in the name of trying to hang onto power. Talk about getting the politicians that you deserve!

Comment number 80.

Having read Stepanie's blog and most of the comments, there is a recurring theme. The main reason that unemployment is lower than expected is that the government has taken up the slack and employed them on terms that people in the private sector, who do real work, can only dream about.It should not be forgotten that Gordon Brown, in one of his many budget speeches, announced that he was cutting the number of public sector jobs; in fact he and his predecessor have increased the number by almost half a million that they admit to, and many more periferal non-jobs that they don't.What is required is a 10 to 20% cut in the public sector workforce and a vast simplification of the tax and benefits system coupled with a removal of the unnecessary bureaucracy that is stifleing the NHS, education and our productive manufacturing and service industries.

#63 fdd"I'll spell it out for you. THERE AIN'T ANY JOBS IN THE 'PRODUCTIVE WORKPLACE."

Here's a thought....CREATE SOME JOBS!!! It's our best route out of this....the only route in fact. We need lots of these intelligent people with some cash in the bank to take a measured gamble.

Get the caps on, find a venture (preferably exporting something!), spend some of the afternoon tv time preparing a business plan and doing some dirty work.

We are a well educated nation with a history of innovation. I'm sure some of you guys have some great ideas...I've got some and am doing my best. However,I work full-time. In the current climate I am best staying put and trying only ventures which can be attempted without the risk of leaving and someone replacing me.

Now could be a good time to get thigns going....cheap, highly skilled labour abundent (or maybe not according to others!).....companies and people scrambling for work. Cheap Interest rates (at least for the mo)....albeit not much money going around to spend (shhh! be positive!).

Go global maybe? Internet....applications for iphone/forthcoming tablet seem to be pretty low risk high profit ventures....and they sell global! Any IT bods been paid off? Bankers fancy learning some real science and actually creating value rather than destroying and stealing it for a change!?

Here's an idea....less money to the banks and more initiatives trying to get these unemployed working. Maybe creat thinktanks full of unemplyoed uni leavers....some pennies to fund prototypes or equipment. Mix the skills together and it's amazing what comes out the other end!I know it sounds harsh but ask them to put in a few hours for their money? Some may even welcome it?

Good luck all those willing to give it a go!

Questions to our dedicated bloggers....1. Can someone lay out the terms of our 'loans' to the banks? I haven't heard much and don't really know the ins and outs. Are we getting a return on our investment? If so, have we been told what? Or are we going to retain our investment for a while and slowly reduce the holding over time? Keep them honest for a while if that's possible...at least til reform is in place.

And there two for the stat guru's...2.How much of our GDP has came from financial services over the last few years (%). I.e. how much cream have they been skimming while doing not much?

3.Are all companies listed on the stock market operating in debt? What sort of percentage of companies are cash rich compared to the borrowers? Surely this makes everything more expensive than it needs to be? I.e. interest? Was this a previous fix to increase cash into the system suring a previous recession or a gradual process?

Help guys, this blog has given me a thirst but I have so many questions and such murky figures!

P.S. Also like thoughts on ways to stop short term trading on the market without destroying it? Is it possible to give investments in the stock market companies, a minimum terms (years) maybe? What would happen?

Comment number 82.

I do not know what Job centre you go to Stephanie, but a couple of weeks ago I visited one for the first time in my 40 yr working career, with my daughters partner who along with other employees at a local factory were sacked for not working overtime when told to, apparently in small print of their contracts, he was going to college on evenings to better himself they told him he had to work, he offered to work for single times at other nights but was refused along with others and sacked.

Now for the Job Centre, he went I sat down next a row of telephones, he was told to go to a certain telephone and phone a central number somewhere in UK, he had to wait over one and half hours for answer, I had to go out and feed the parking meter in meantime, twice, eventually spoke to a person on line and told to complete application on line.

My daughter took a part time job this week 8 hours to get additional money from the est £63 JSA they ended up having for them both, when she told them yesterday they said they will be deducting £40 out of the JSA, she is working 8 hours for £50 quid, so to top it all 8 hours for £10, and today he was told because he is at college on a Tuesday evening they are suspending his JSA because he is not available for work on those evenings. He now has to go to another interview. There you are 2 off the employment list no bother at all.

Comment number 83.

Well, it sounds all very nice in Hertford, but up here on the Cumbrian border it's a bit different. I'm an unemployed IT teacher because, in spite of what it says in the glossy brochutre, there's no funding for IT training. I'm over 60 and, like an idiot, have saved all my life, so although I was technically a claimant I received no unemployment support of any kind. There was no interest at all from the Job Centre as regards my getting a job, but a great deal of energy was put into making life as a claimant so difficult and unpleasant that I signed off. So although I can't find a job, I'm no longer 'Unemployed'. Re-reading this I sound like a whingeing old git, but there are a lot of people who are not signing on yet are not technically 'Unemployed' that will have shared my experience.

Comment number 85.

Oh...one more question to anyone who knows has some answers, or at least a view....what percentage of our GDP leaks out of our economy via illegal activities? Which exchange rates is it effecting and by what degree?

Some very good contributions here and nice to see many not fooled all bar a couple of usual suspects.

If you look at the labour market stats from ONS stretching back to 1990 (as much as you trust them to be reliable) the real headline which Stephanie does highlight is the part-time numbers. But here are the full time and part time ones:

April 2008 was when FT employment was at its highest and we're about 18 months in. (As an aside, most if not all of the increase over the period from 1993 can be accounted for by an increase in public sector employment).

Given the context of today's announcement and the various good arguments on the artificiality of various schemes already mentioned here I'll leave those to spot the big looming problem........

Comment number 89.

There are other significant factors leading to "unexpectedly low unemployment", as follows:

-The 30% fall in the Pound verus Polish Stolti since 2004 has led to more Poles leaving than coming to the UK. They have left jobs that Brits will now entertain in a recession and some Brits will have taken these vacancies.

-There was a massive increase in HE applications from A level to post-graduate level. That is, some 150,000 to 200,000 additional students who would otherwise have been unemployed.

On the latter, I was particularly disappointed that 30,000 A level students with the right grades were unable to go to university because places were swamped by mature student applicants encouraged to take HE rather than benefits. This would be good in normal times but not when denying access to the meritorious who would also have to pay their way via student loans.

Comment number 90.

Does this mean the old "Labour isn't working" poster might not get recycled by The Conservatives after all?

How about a pat on the back for the UK captains of industry who have created millions of jobs in India and China over the past 30 years. Our great companies only appear to know how to cut their way to profitability (sorry - this isn't a Cadburies blog is it). Our politicians can smile or look away as the market takes its uncontrollable course - then take credit whenever something remotely positive takes place.

Taking their lead I will take credit for my children's good looks, and blame my wife for all of their imperfections and maybe my friends will believe me :-)

Comment number 91.

"Oh what a tangled web we weave, when at first we practice to deceive!!"

Everything has been twisted beyond meaning, with the consequent result that no-one has the first clue what is going on.

You have over 8 million people who are "economically inactive" i.e. They are unemployed. Looking at a normal definition of "economically inactive" you will no doubt find a fair few hiding out in some form of QUANGO or some other public body. There will be a fair few students who will struggle to actually locate their place of study. Their cover is so deep that no-one knows how many of them there are, amd they are not about to identify themselves.

Some people have only got jobs because they have agreed to wage cuts. How does this help in an economy that is 70% composed of consumption? The economic effects of cutting pay will be closely correlated to the economic effects of cutting jobs, you can just spin it differently. Big wow - now I see the benefits of an "educated" population, where that word has also taken on a radically different meaning to that found in a dictionary.

No doubt some clown somewhere will be forecasting tax revenues based on newly minted fraudulent numbers. Are they going to be surprised when their forecasts miss reality by a wide margin. "Unexpected setback", "surprising", "unforeseeable"

Stop Press: "Arrested 17 year old Icelandic trainee number counter under the terrorism act for fraudulent manipulation of numbers - how prescient of G Brown to have branded the whole nation of Iceland a terrorist threat - now let´s move on"

They reckoned that the VAT cut etc would save/create 35k jobs in 2009 (without which we would be discussing a continuing increase in unemployment, not a 7k fall), but restoring it to 17.5% would destroy 30k jobs in 2010, and the tax/NI rises to pay for it will destroy 91k jobs in 2012 and 84k in 2013.

I'm sure 170,000 people will appreciate losing their jobs just so that 35k people get a job for a year and Brown can say that unemployment is dropping before the election.

However, those job will be lost during the next parliament, so no doubt people like biggles (#53) will blame them on the next government and not on Brown's political point scoring.

I'm also hearing a lot of anecdotes of working hours being cut in ways that won't show up in the figures, for instance a software company that employed roughly equal numbers of staff and contractors has now ditched almost all the contractors. Who won't qualify for the dole, but they won't be swamped with new work either. On the other hand I know a supplier to an "old economy" sector who is rushed off his feet, his customers are booming thanks to the depreciation of sterling triggering a rush of exports. So the coming sterling crisis won't be all bad....

Comment number 93.

it could be me but ,no one seems to mention the the sheer amount of companies that are moving to poland/slovac side of it and all of the phone centres that now are located in places like joburg/india/ect ect,we hear that companies with hundreds of empoyies are shutting down ,they just forget to mention that another few hundred jobs went with the supply,companies that fed the factory in the first place.

take a look at Luton in beds take away the auto factories ,and things get dire ,take away the supply chain jobs and things get serious,

more and more business,s are relocating abroard ,business in this countrytends to be smaller ,its cheaper to import rather than mfg here,hence if you want to make money shut the factory sack the workers and lease a warehouse import your goods ,if they need fitting contract out,if you are just selling you sell on the net ,and thats what is happening to our country, and why its a cheaper model,because its business.

as for the gov telling us the public that the jobless figures are going down ,check out bankrupt figures, and companies relocating abroard,and the everchanging benifit rules,eg suspensions,with all of the biodegradeable lead free none violent regulations required in runing a business and employing people its no wonder the jobs have gone.someone once said [ we are a nation of shop keepers ]what you have to look at there is [who owns the shops ]

how many trucking opperations are registered off shore ans appx 90%look around you unemployment is on the up only a nutter would say its going down ,but there you go !

Comment number 94.

Your post reminds me of Yank that I once knew who worked at Ford Motor Company in the UK. He was a big cheese at Ford's Dagenham Engine Plant. I worked for a prominent supplier at the time. The discussion with this particular Yank was about the quality/robustness of the parts my company supplied to them for a range of Ford's engines. The issue was a quality issue.

Anyway....this particularly experienced Yank engineer was all too aware of the cheapness of rhetoric!....to the point where he was known for his catch phrase (when given a splurge of rhetoric) was...'SHOW ME THE DATA'. He used to repeat, repeat and repeat again this demand in many meetings...until the company I worked for finally showed him what he wanted to see...the moral of the story...the numbers don't lie!

I found out that this particular Yank was from Missouri...and guess what...I later found out that the well known tag name for the state of Missouri in the US is?....'The Show Me State!'

Comment number 95.

Stephanie, at PMQ's today Gordon stated Job Centre Plus are getting 300,000 of unemployment list each month when answering a serious question about job losses at EON call centre, at that rate we will have full employment by August. Can you ask him to check his figures please because somehow I do not believe it.

Comment number 97.

Last year I got a job in Brekemet (not sure I’ve spelt it correctly). In any event if you set off from Manchester it’s up the M6 to Penrith and turn left to the west coast, about a 240 mile round trip.

I set off at 6.00 a.m. got back home around 12 hours later, spent £40 on diesel, and having deducted my operating costs and tax, probably made around £50.00.

I'm a family man with a wife and three children, how in god’s sweet mother earth do you make it fit.

What hurts, is things like a £1,500,000,000.00 bonus payments to a state owned bank which my tax payments are funding.

Currently I’m working around 20 hours a week, fortunately my wife works part time, but still, if this represents common sense and fairness, I loose all faith that such actually exists.

Comment number 98.

Ok Stephanie I can sense a begrudging impartiality on your part, you do offer only partial credit to this government. However even that is too much. It is the old case of giving credit for shutting the stable door after the horse has well and truly bolted. And this government, more than any in the past, has been culpable of leaving the door wide open in the 1st place. The stable may seem nice and warm just now but the horse is still on the loose in the woods and as you correctly point out we are not out of it yet (the woods that is) and we are going to pay for this sometime soon.

Comment number 99.

One should expect a fall in unemployment for seasonal reasons as school-leavers and graduates move into the employment market in July but individuals retire as they reach 65 (or 60 for some females or 55 for some public sector workers).The ONS website starts with a fall in the employment rate; their press release says that the reported fall in unemployment is due to fewer students looking for jobs in September-November (during term) than in June-August (during the Summer Vacation) Surprise?? Then they go on to show that the numbers of "employed" include 1.028m who had a part-time job because they could not find a full-time job - a rise of 46k that equates to around 23k of full-time jobs. This is not a recovery in employment: it is a further fall that has been misrepresented as a fall in unemployment.The next question is "By who"? as the ONS presented the data honestly.The best that can be said is that unemployment (total or partial) rose by less than expected.

Comment number 100.

I had a nosey today and spotted an extra 12 desks. As a guesstimate, if one desk can service six unemployed jobseekers every hour for seven hours a day, twelve desks will service an extra 504 people every day.

Given that signing only occurs once a fortnight, multiply that number by 10 working days and it means twelve desks provides signing for an extra 5,040 people. The jobcentre serves an area with around 50,000 people of whom roughly 2,400 currently signing on. So either they expect things to get a lot worse or I'm massively overestimatng how many people they can see in an hour...?

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